Why did the Byzantines fail to reconquer the interior of Anatolia in the 12th century?

Jan 2016
Victoria, Canada
BTW, how much did the loss of Cyprus hurt the Byzantines?
A fair bit, particularly since it was the first major region of Romania proper to be lost in the late-12th century (first to the rebellion of Isaac Komnenos and then the Crusaders), but it was mainly useful as a military base and trade/commerce hub (particularly for pilgrims*), not as a source of manpower or taxation. The loss of Cyprus, and particularly the failure of Isaac Angelos's expedition to retake it, was, therefore, very damaging to Roman prestige at the time, but overall it was only a minor affliction compared to everything which would come afterwards; even in 1900 the island only had a population of around 220,000 people, while the combined population of the regions immediately lost to the Turks, Crusaders, and Venetians in the wake of 1204 was closer, at the time, to 8-10 million.

* An interesting, if only tangentially related note is that the use of flying buttresses and lancet arches was pioneered on Cyprus in the 6th and 7th centuries, and may, as transmitted through the accounts of pilgrims, have proved a crucial influence on the development of Gothic Architecture in 12th century Western Europe -- see this article.

Also, why did the Byzantines fail to negotiate a union with Trebizond after the Latins were kicked out of Constantinople?
There were a great number of factors at play, pretty much all of them working against union, despite nationalist sentiments on both sides. The first, and perhaps most important, is that even under favourable conditions a union would pretty much only benefit one party -- the Emperors at Constantinople -- while drastically reducing the power, prestige, and independence of the Emperors at Trebizond. This might have been mitigated if the Empire of Trebizond was in A) a precarious position, and B) one in which the Emperors of Constantinople would be able to provide reliable protection, but the shield provided by the Pontic Alps and the heavy Turkish presence in central Northern Anatolia (which both were working to reduce, but never did entirely) meant that neither of those were the case. The Emperors of Trebizond of the mid-13th century were, additionally, nominally subject to the Mongols of the Ilkhanate, so a union with the non-subject Romans in the west would both provoke the Mongols against Trebizond and heavily endanger the precarious arrangement worked out with them by Michael VIII. Finally, Michael devoted much of his reign to trying to work out a union with the Latin Church in the west, a very unpopular move among the people and clergy; the Emperors of Trebizond, in response, set themselves up as defenders of proper Orthodoxy, taking in political/clerical refugees and dissidents from Constantinople, and thus further belaying any idea of political union.

Despite all this, Michael did manage to get the Emperors at Trebizond to change their title to "Emperor and Autokrator of all the East, of the Iberians [i.e. Laz/Georgians] and of Perateia [Roman Crimea]", leaving him as the sole, unquestioned Emperor of the Romans, and Andronikos III would, later, manage to get his candidate on the Trapezuntine throne, but by then the situation had deteriorated far too much in Western Anatolia for political union to be on the table.